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Cambodia’s logistics performance and emerging market potential has
significantly declined, a recent study shows, despite its development
as a key sourcing location for North American and European garment
retailers.
The Agility Emerging Markets Logistics Index, powered by Transport
Intelligence, last month ranked Cambodia 44th out of 45 emerging market
countries, with only Uganda considered to be a worse performer.
The Index ranked countries by quality of transport infrastructure,
economic growth potential, attractiveness to foreign investment, and
market accessibility, risk and security. Cambodia saw the 4th biggest
fall down the index, and also ranked 11th in emerging markets with least
potential.
According to Nhiev Kol, general manager for CMA CGM Cambodia, results
from the study should not be surprising. As well as citing under investment in logistics infrastructure, he explained that handling
charges at Sihanoukville Autonomous Port (SAP), Cambodia’s only major
seaport, are significantly higher than in neighboring countries.
“Tariffs and port charges are over three times higher than Cai Mep in
Vietnam and eight times higher compared to Malaysia’s Port Klang,” he
told The Loadstar.
The French shipping line uses Port Klang as the key south-east Asian transshipment hub, and it hosts a call on four of the eight Ocean 3
Asia-North Europe services, and four out of five Asia-Mediterranean
services.
Mr Kol added: “We have raised the issue of bench marking to the port,
but there is no improvement so far. If the port charges us higher per
unit container then we will charge a higher rate to our customers.”
Handling costs at SAP could be reduced when its current $80m
expansion project is completed. The port is gearing up for an Initial
Public Offering to fund the construction, which will see overall
capacity extended from 350,000 to 500,000 teu by 2017.
Ma Sunhout, deputy director general, SAP, explained to the Khmer Times
that with cargo throughput growing at 15%, urgent development and
investment is needed to accommodate larger vessels and projected volume
increases.
SAP plans to spend $12m to purchase new gantry cranes, and another
$13.5m will be used to expand the port for agricultural imports and
exports, including rice, cassava and wood chips. Work has already begun
on a 330-metre quay wall, which will deepen the port’s draft from 8.5 meters to 13.5 meters.
It’s not just Cambodia’s port efficiency that needs improving,
however. The quality of roads and access to the ports themselves remain a
major logistics challenge.
“The whole infrastructure of the country must be upgraded or
renovated entirely,” said Frederic Chan, country manager for CargoTeam
Cambodia, a forwarder based in the capital Phnom Penh.
“Specifically, access to the Sihanoukville Port itself isn’t really
safe. From Phnom Penh, we need to take the national toll road 4 and that
road has amongst the highest rate for road accidents in the Kingdom,”
Mr Chan said.
Rail is one option for transporting goods between the capital and
Sihanoukville, with the tracks having recently been renovated. However,
Mr Chan is unconvinced that this route will be economic due to the extra
container moves.
“That solution must be carefully explored as to whether it is very
convenient, as we need to transport from the sea port to the rail
station then lift the container on/off the train.”
Meanwhile, a report by the World Bank says simplifying customs
procedures, border reform and integrating further into the ASEAN region
is Cambodia’s best hope for realizing its trade potential in the shorter
term.
“The World Bank is helping establish a ‘National Single Window’, an
automated solution combining different border agencies into one
electronic platform for use by traders and businesses,” the report said.
Mr Kol agreed streamlining export processes are a priority and called for a united effort to bring down logistics costs.
“To improve logistics cost we need all concerned parties involved,
especially the Department of Exports, to improve clearance export
processes, infrastructure, reduce intangible expenses of getting cargo
on-board ships, trucking charge, oil price, and port tariff charges.”